El Salvador is considering becoming the first country to accept it Bitcoin as legal money to protect the country from inflation.
According to CNBC, El Salvador President Nayib Bukele said he would propose a bill that would make Bitcoin legal money, alongside the US dollar. The government will work with digital wallet company Strike to create a financial framework around digital monetary form.
Strike founder Jack Mallers claimed Bitcoin would help countries, such as El Salvador, to protect against the "potential disruptions" of inflation common to traditional currencies.
This movement it may not be as bold as it seems for a state like El Salvador. CNBC notes that the transportation money from migrants, represent about 20 percent of El Salvador's gross domestic product and often involve high transaction fees as well as long delays. Bitcoin and other cryptocurrencies could make these transfers more practical and immediate.
However, this is still an important bet. Bitcoin is not backed by a fixed value, such as gold or the government of a large country. Like other cryptocurrencies, it is highly volatile and with huge peaks and falls often associated with events that in some countries could be considered minor. A Bitcoin-based resident could be ruined if its value plummets.
If El Salvador's move succeeds, it could give Bitcoin and other cryptocurrencies another foothold in the financial world, making it easy to work with world with an entire country. Just do not expect other countries to harmonize with Bitcoin. The US Federal Reserve, as well as the Swedish government, for example, researches its own digital currency.